Since education makes a person more likely to leave your region, how do you justify your investment in human capital?

Saturday, March 01, 2008

Economic Cluster Mobility

When the global economy went through a major transformation, most of the Rust Belt was unable to keep up. As the post-industrial fog begins to burn off, shrinking cities are desperately seeking comparative advantage in biotech, green technologies, and water dependent industry (to name a notable few). Unfortunately, the silver bullet doesn't appear to be cornering the market of a sector of ideas or monopolizing a scarce resource. What the Rust Belt needs is more gamblers:

What Silicon Valley can contribute to a new American economic model is not just its fantastic technology, but its entrepreneurial spirit. Silicon Valley is about a culture of risk-taking, not just by companies and investors, but workers as well.

I realize that it’s pretty hard for a blue-collar worker in Toledo to understand what any of that has to do with his factory closing, but in fact it has everything to do with it. The U.S. economy wouldn’t be in the funk it’s in if it took more cues from Silicon Valley and fewer from Wall Street.

If the author of the above quote is correct, don't expect any of the emerging economic clusters in the Rust Belt to make much of an impact. Silicon Valley is already turning its "culture of risk-taking" towards green ventures. Ah, but even Silicon Valley may not have all the necessary pieces to succeed:

When it comes to green investing, public-policy risk may matter at least as much as technology risk. Even though the three main remaining candidates for the White House all say they will introduce a mandatory federal cap-and-trade scheme to limit America's carbon-dioxide emissions, the details have yet to be agreed on and the votes cast. “Managing public-policy risk is not something traditional technology executives have had to do, so there will be a steep learning curve,” says Diana Glassman, an environmental-business banker at Credit Suisse.

Do any Rust Belt cities or regions specialize in managing public-policy risk?